Towers Perrin Quits SD Pension Work

September 28, 2005 (PLANSPONSOR.com) - A consulting
company that had been serving as an actuary for the City of
San Diego has decided to bail out of any further work on the
city's much troubled pension system.

City Manager Lamont Ewell made the announcement about
Towers Perrin earlier this week, saying that the firm had
notified the city with a phone call asking for a quick
departure, according to the San Diego Daily
Transcript.

Troy Dahlberg, consultant for the city’s audit
committee, said the company’s resignation stems from
concerns over a series of new assignments that would pit
its work against the work of other consultants. “In Towers
Perrin situation, there is a sensitivity about doing work
against other professionals,” Dahlberg said, according to
the newspaper. “A lot of professionals have concerns about
if they begin to do work where they think it can be used
against other professionals.”

Towers Perrin was instrumental in the production of the
city’s “pension solution” plan aiming to help boost the
funded ratio to the San Diego City Employees’ Retirement
System (SDCERS). The plan suggested pumping $600 million
into the retirement system over three years to pay down the
city’s ballooning pension deficit.

The city’s pension system is battling an estimated $1.37
billion shortfall, and, as a result of a proposition passed
by the voters in the November 2004 election, that debt will
have to be paid off in 15 years. If no additional
funding is paid to the retirement system, Towers Perrin’s
report said, the required payment would jump to $323
million in fiscal year 2014, compared to $167 million in
fiscal year 2006.

Towers Perrin will continue work with the city’s risk
management department, according to the report.